A Jersey-based start-up has been granted the second only licence in the British Isles to cultivate pharmaceutical-grade cannabis for profit, more than two decades after the first permit was issued.

Northern Leaf has been awarded a licence to grow cannabis for medical use by the government of Jersey under UK Home Office rules and is preparing to cultivate marijuana in a greenhouse sprawling across 75,000 square feet. It plans to start supplying drugmakers in the UK, Denmark, Germany, Spain and Portugal by the end of this year.

“Demand is increasing globally and the market is currently undersupplied,” Campbell Dunlop, chief executive of Northern Leaf, told the Financial Times.

Northern Leaf, which was founded two years ago and received its permit in December, is the second only company to be granted a UK licence for commercial marijuana cultivation. GW Pharmaceuticals, a US-listed leader in cannabis-based epilepsy medicines that was founded in the UK, was awarded the first permit in 1998.

The Jersey group will be up against established cannabis producers elsewhere in Europe. These include Aurora Cannabis, which has 100,000 sq feet of greenhouses in Denmark, and Tilray and Emmac, which have 160,000 sq feet and 300,000 sq feet respectively in Portugal, according to investment firm Chrystal Capital, which has helped Northern Leaf raise funds.

The UK is among many countries that have in recent years legalised the use of cannabis-based medicines for pain relief or to treat conditions from cancer to epilepsy.

While North America dominates the cannabis investment market, interest in Europe is growing. In September, the FT reported that Chrystal was looking to raise as much as $200m for a new cannabis investment fund.

The European medical cannabis market was valued at €330m last year, according to Brightfield Group.

Mr Dunlop, who described securing the licence as “quite a big breakthrough”, said he expected Northern Leaf’s first shipment of cannabis to reach half a tonne — Emmac produced roughly 10 tonnes last year. The licence relates to a site that has a maximum capacity of 400,000 sq feet, he added.

Northern Leaf, which does not disclose its owners, said it has spent £12.5m in purchasing and refitting real estate and expects to invest another £6m this year. It also aims to double the number of staff from 35 employees.

The company raised £3m in capital in January last year through Chrystal, which is also preparing to launch a £5m funding round next week.

Mr Dunlop would not be drawn on expected revenues, saying “there is such a variance in price depending on content of THC and CBD [two of the most popular cannabinoids]”.

“It is not an exact science, it is agriculture and can vary in terms of quality,” he added.